Member Article

The Most Important Financial Decisions for Startups

Creating a business can be an exciting and stressful time in life, in equal measure. Especially as it means making important and sometimes overwhelmingly big decisions on a daily basis. Financial decisions can make or break your business, so it is important to be aware of their importance early in your startups life. In that case, what are some important financial decisions that you will face over the course of creating your startup?

How Will You Structure Your Business?

Working out how your business will generate money, the form in which it will receive it from customers and even how it will flow through your company is an important decision. It centres around the structure of your company, the invisible infrastructure which dictates what goes where when it comes to money. Create a minimum monthly budget and decide how this money will regularly flow through your company structure. Doing this with a minimum number allows for anything more you make to be excess, allowing your company to run on a tight budget and hopefully make money directly through your structure. The more efficiently you can run on a small budget, the better a situation your startup will be in.

Contingency Plans

Having money tied up in your business for emergencies is vital for startups. Especially as you can never answer those ‘what if’ questions, who knows what may come around the corner throughout 2018. Anything that disrupts operations needs to be accounted for. Which could be anything from a financial crash to a snow day, both can benefit from the same contingency plans.

Your contingency plan needs to include an assessment of what business risks could be, money saved in the case of emergencies and a strategy that can develop under financial pressure - i.e. your sales have the capacity to increase to meet financial hardship. Maximising profit potential, even during downturns, is part and parcel to a good business contingency plan.

Running Costs

Paper, printers, filing space and even brown boxes. These are all things that many startups will need to invest in to secure success, no matter how small or insignificant the items may seem. It is these small, day to day, running costs which could be the difference between success and failure. Especially if you fail to budget properly, as you can quickly be overrun by the cost of a simple thing such as paper as a startup.

Stating that stationary is the be all and end all of your business may sound slightly drastic. But as a startup, it is anything but.

Will There Be Employees?

This may not seem like a financial decision, but employees can be one of the biggest drains on your profit when first starting out. Especially if you are in the mind to hire top-notch employees to help take your startup to the next level. Wages alone are a huge monthly commitment.

For this reason, it is necessary to ensure you do not over hire. Only recruit the staff that are essential for your startup growth in the first year or so, then if this growth does occur you can look to expanding even further.

Do You Need an Office/Storefront?

Many of these financial decision can have a big effect on the overall success of your startup. But, none more so than that of whether or not your business will have a physical office or even a retail space depending on your business setup.

Real estate for business comes with lots of hidden costs - business rates, premises repairs and upkeep, even utilities - so be sure to factor these into your budget before jumping into a swanky new office your startup cannot afford.

All in all, being smart with your money is essential for the success of your startup. Especially as the financial decisions you make on day one can have huge repercussions moving forward. Make smart decisions now and benefit from them moving forward!

This was posted in Bdaily's Members' News section by Zack Halliwell .